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  • 1. Project report On “SWOT analysis of Reliance retail” Submitted By: Submitted To: Mukesh Kumar Mr. Amit Sharma Roll No. 27 Faculty Retail Strategy PGDRM-2B FDDI Table of Contents 1
  • 2. S. No. Topic Page No. 1.0. Executive Summary 03 2.0. Objectives 04 3.0. Company Profile 05 3.1. Founder Profile 06 3.2. Reliance Retail Ltd 06 4.0. The TOWS analysis 08 4.1. Strengths 08 4.2. Weaknesses 12 4.3. Opportunities 12 4.4. Threats 13 5.0. TOWS Matrix 14 6.0. Conclusion 14 1.0. Executive summary: - 2
  • 3. “Retailing is known to be the first point of customer contact”. Indian retail industry is very old, that is the reason behind calling India a country of “Dukandaars”. In the last few years the Indian Retail industry has grown by leaps and bounds. Big Indian and Foreign players have entered the Indian market and some of them are planning to expand. The expansion is in the terms of presence in different formats like Supermarket, Hypermarket, Discount and Convenience Stores. The point of consideration is the working and performance of these players in such formats. In this report Reliance industries is taken as a sample and the TOWS analysis is done after analyzing all the aspects of Reliance retail like Strengths, weaknesses, opportunities and Threats. Here, endeavor is on the internal and external parametersas the strengths and weaknesses are the internal factors and on the other hand the opportunities and weaknesses are the external. After analyzing all the aspects of TOWSanalysis I conclude that the Reliance retail has more strength and is able to withstand with the competition and will able to achieve its goal and objectives. 2.0. Objectives: 1. To understand Reliance retail Ltd. 3
  • 4. 2. To understand the Strengths, Weaknesses, Opportunities and Threats 3. To develop a TOWS matrix. 3.0. Company Profile: 4
  • 5. The Reliance Group, founded by Dhirubhai H. Ambani (1932-2002), is India's largest private sector enterprise, with businesses in the energy and materials value chain. Group's annual revenues are in excess of USD 27 billion. The flagship company, Reliance Industries Limited, is a Fortune Global 500 company and is the largest private sector company in India. Backward vertical integration has been the cornerstone of the evolution and growth of Reliance. Starting with textiles in the late seventies, Reliance pursued a strategy of backward vertical integration - in polyester, fiber intermediates, plastics, petrochemicals, petroleum refining and oil and gas exploration and production - to be fully integrated along the materials and energy value chain. The Group's activities span exploration and production of oil and gas, petroleum refining and marketing, petrochemicals (polyester, fiber intermediates, plastics and chemicals), textiles and retail. Reliance enjoys global leadership in its businesses; The Group exports products in excess of USD 15 billion to more than 100 countries in the world. There are more than 25,000 employees on the rolls of Group Companies. Major Group Companies are Reliance Industries Limited (including main subsidiaries Reliance Petroleum Limited and Reliance Retail limited) and Reliance Industrial Infrastructure Limited. 3.1. Founder profile: - quot;Growth has no limit at Reliance. I keep revising my vision. Only when you can dream it, you can do it.quot; 5
  • 6. Dhirubhai H. Ambani Founder Chairman Reliance Group December 28, 1932 - July 6, 2002 Dhirubhai Ambani founded Reliance as a textile company and led its evolution as a global leader in the materials and energy value chain businesses. 3.2. Reliance Retail Limited: - Reliance is gearing up to revolutionize the retailing industry in India. Towards this end, Reliance is aggressively working on introducing a pan-India network of retail outlets in multiple formats. A world class shopping environment , state of art technology, a seamless supply chain infrastructure , a host of unique value-added services and above all, unmatched customer experience, is what this initiative is all about. The retail initiative of Reliance will be without a parallel in size and spread and make India proud. Ensuring better returns to Indian farmers and manufacturers and greater value for the Indian consumer, both in quality and quantity will be an integral feature of this project. By Creating value at all levels, wewill actively endeavor to contribute to India’s growth. The project will boast of a seamless supply chain infrastructure, unprecedented even by world standards. Through multiple formats and a wide range of categories, Reliance is aiming to touch almost every Indian customer and supplier. 6
  • 7. Fig. The famous reliance retail wardrobe 4.0. The Threats-Opportunities-Weaknesses-Strengths (TOWS): 7
  • 8. The Threats-Opportunities-Weaknesses-Strengths (TOWS) is also named as SWOT analysis. A TWOS Analysis is a strategic planning tool used to evaluate the Threats, Opportunities and Strengths, Weaknesses, involved in a project or in a business venture or in any other situation requiring a decision. This is an important tool in order to formulate strategy. This Ma is an trix important matching tool that helps managers develops four types of strategies: SO Strategies (strength-opportunities), WO Strategies (weakness- opportunities), ST Strategies (strength- threats), and WT Strategies (weakness-threats).The mostdifficult part of TOWS matrix is to match internal and external factor. Once the objective has been identified, TOWS are discovered and listed. TOWS are defined precisely as follows: » Strengths are attributes of the organization that are helpful to the achievement of the objective. » Weaknesses are attributes of the organization that are harmful to the achievement of the objective. » Opportunities are external conditions that are helpful to the achievement of the objective. » Threats are external conditions that are harmful to the achievement of the objective. After analyzing all the aspects of Reliance retail the TOWS factors are listed below and explained: 4.1. Strengths: The strengths of any organization lies in the different attributes that a firm carries with itself and makes it a powerful standing in the market. Such attributes of Reliance retail are discussed below: a) Brand Equity: Reliance retail is a vertical of Reliance industries limited and one of the leading firm in India. It is listed among the “Fortune 500 companies of world” by Forbes magazine. A reliance industry Ltd apart from retail has many SBU’s (Strategic Business Units). Starting with textiles in the late seventies, Reliance pursued a strategy of backward vertical integration - in polyester, fiber intermediates, plastics, petrochemicals, petroleum refining and oil and gas exploration and production - to be fully integrated along the materials and energy value chain. So, the brand equity is one of its strength. b) Good financial position: Reliance retail has a strong financial position in the market because it is the only retail organization invested Rs.25000 Crores in retail. Apart from that the Reliance industries Ltd the umbrella brand is the organization which is listed in the “Fortune 500 companies” by Forbes magazine and the owner of Reliance industries Ltd. Mr. Mukesh Dhirubhai Ambani” is among the richest peoples of India. 8
  • 9. c) Backward Integration: Reliance retail is among the few organizations which entered Indian Retail sector with backward integration. Before discussing the aspect of backward integration as per the Reliance Retail let’s discuss the concept of backward integration. ‘Seeking ownership or increased control of a firm’s suppliers’ is backward integration. Both manufacturers and retailers purchase needed materials from suppliers. Backward integration is a strategy of seeking ownership or increased control of a firm's suppliers. This strategy can be especially appropriate when a firm's current suppliers are unreliable, too costly, or cannot meet the firm's needs. Reliance retail has conceptualized the concept of contract farming for their need of agricultural products and for other identities like they have different SBU’s they are as follows: Subsidiaries of Reliance retail Ltd Function Reliance Dairy Foods Limited Producing dairy products under “Dairy Pure” Label. Reliance Integrated Agri Solutions Limited Producing Agri products under labels ‘Reliance Select and Value’. Reliance Lifestyle Holdings Limited Producing Home furnishing products under the ‘Home One’ Label. Reliance F&B Services Limited Producing food and beverages under the label ‘Reliance Select and Value’. Reliance Food Processing Solutions Limited Producing processed food under ‘Reliance Select’ label. The strategy of backward integration by Reliance retail endows it with much strength like: » Minimizing the supplier’s power as explained in the ‘Michael Porter Five forces model. » Able to meet the demand and supply. » Reducing the cost of outsourcing. d) Horizontal Integration: Reliance retail is among the few organizations which entered Indian Retail sector with Horizontal integration. Before discussing the aspect of Horizontal integration as per the Reliance Retail let’s discuss the concept of horizontal integration. ‘Seeking ownership or increased control over competitors. Horizontal integration refers to a strategy of seeking ownership of or increased control over a firm's competitors. One of the most significant trends in strategic management today is the increased use of horizontal integration as a growth strategy. Mergers, acquisitions, and takeovers among competitors allow for increased economies of scale and enhanced transfer of resources and competencies. Before entering Indian market Reliance retail acquired ‘Adani Retail’ a famous supermarket chain in Gujarat. Apart from that the multi-format presence of Reliance fresh is also an example of horizontal integration. The different formats of Reliance Retail are as follows: Reliance Retail Limited Subsidiary of RIL 9
  • 10. Reliance Fresh Limited Subsidiary of Reliance Retail Limited Retail Concepts and Services (India) Limited Subsidiary of Reliance Retail Limited Reliance Retail Insurance Broking Limited Subsidiary of Reliance Retail Limited Reliance Dairy Foods Limited Subsidiary of Reliance Retail Limited Reliance Retail Finance Limited Subsidiary of Reliance Retail Limited RESQ Limited Subsidiary of Reliance Retail Limited Reliance digital Retail Limited Subsidiary of Reliance Retail Limited Reliance Financial Distribution and Advisory Services Subsidiary of Reliance Retail Limited Limited Reliance Hypermarket Limited Subsidiary of Reliance Retail Limited Reliance Retail Travel & Forex Services Limited Subsidiary of Reliance Retail Limited Reliance Brands Limited Subsidiary of Reliance Retail Limited Reliance Wellness Limited Subsidiary of Reliance Retail Limited Reliance Footprint Limited Subsidiary of Reliance Retail Limited Reliance Integrated Agri Solutions Limited Subsidiary of Reliance Retail Limited Reliance Trends Limited Subsidiary of Reliance Retail Limited Reliance Lifestyle Holdings Limited Subsidiary of Reliance Retail Limited Reliance Universal Ventures Limited Subsidiary of Reliance Retail Limited Reliance AutoZone Limited Subsidiary of Reliance Retail Limited Strategic Manpower Solutions Limited Subsidiary of Reliance Retail Limited Reliance Gems and Jewels Limited Subsidiary of Reliance Retail Limited Delight Proteins Limited Subsidiary of Reliance Retail Limited Reliance F&B Services Limited Subsidiary of Reliance Retail Limited Reliance Agri Products Distribution Limited Subsidiary of Reliance Retail Limited Reliance Leisures Limited Subsidiary of Reliance Retail Limited Reliance Retail Securities and Broking Company Limited Subsidiary of Reliance Retail Limited Reliance Home Store Limited Subsidiary of Reliance Retail Limited Reliance Trade Services Centre Limited Subsidiary of Reliance Retail Limited Reliance Food Processing Solutions Limited Subsidiary of Reliance Retail Limited Reliance Supply Chain Solutions Limited Subsidiary of Reliance Retail Limited Reliance Loyalty & Analylitics Limited Subsidiary of Reliance Retail Limited Reliance Digital Media Limited Subsidiary of Reliance Retail Limited Abcus Retail Private Limited Subsidiary of Reliance Retail Limited Bigdeal Retail Private Limited Subsidiary of Reliance Retail Limited Advantage Retail Private Limited Subsidiary of Reliance Retail Limited Reliance Commercial Trading Private Limited Subsidiary of Reliance Retail Limited This integration helping in following areas: - » It helps in gaining increased economies of scale » To gain composite market presence. » It helps in Guerrilla warfare strategy. » It helps in transfer of resources and competencies. 10
  • 11. » It helps in getting quantity discounts and hence reducing suppliers power. e) Strong IT and Backend operations: In today’s world being functional is not important the thing which is important is being efficient. The areas which make an organization more efficient are the backend operations and usage of IT. Reliance retail Ltd entered Indian market after doing a research for 2 Years. The backend operations are strengthen by using specific interface of Information and technology. Reliance Fresh (the SBU of Reliance retail) was the first retail firm to use SAP in retailing in India, it is an ERP system helps in Warehouse, Vendor and Supply chain Management.Therefore making backend operations more efficient. The POS (Point of Sale) software which is used by reliance retail is “RETALIX” it is one of the finest retail POS software worldwide and also used by many global players. f) Experienced Management team: Reliance industries Ltd the umbrella company of Reliance industries Ltd. Is working in Indian market from seventies have a team of experienced and qualified managers. There are many examples which can be quoted to defend this statement. The examples are as follows: » Reliance retail entered Indian market with backward integration to reduce the cost and suppliers dependency. » Entered Indian market after a research and study of two years. » When Reliance Fresh outlets are opposed by U.P. (Uttarpradesh) Govt. and were being closed. The management reacted immediately and utilized the Space, Distribution Centre for the other formats. For example Opening Reliance Jewel store at Shopprix Mall; Sector-61; Noida. 4.2. Weaknesses: Weaknesses are attributes of the organization that are harmful to the achievement of the objective. A weakness is a opposing forces to a company unable it to achieve its goals and objectives. There is a quote that there is no success without difficulties. The weaknesses are the areas which are developed to win because sometime “Even dreaming for roses one has to through with the thorns’. I tried to find as many as weaknesses I can collect and search but I am unable to find more than two weaknesses. The weaknesses I am unable to understand are as follows: 11
  • 12. a) Multi-Format Presence: Presence of Reliance retail in horizontal integration is one of the strength but same way it is weakness too. Having a big organization structure increases following costs: » Increase in the cost of operations. » Increase in workforce management. b) Presence at Prime Locations: Presence of Reliance retail at prime locations gives it strength of visibility and awareness but the increasing realestate cost in India is increasing the operating cost of Reliance retail store. Hence, reducing the profits simultaneously. c) Losses due to Joint ventures: Reliance retail has many joint ventures with the foreign retail brands but due to the primecrisis in US market has slow down the speed of expansions and new product offerings. » Reliance Retail, Citibank tie up for consumer finance. » Europe's Pearle tie up with Reliance Retail for optical products. » Reliance Brands, a subsidiary of Reliance Retail, has entered into a 49:51 joint venture with Italian fashion house, Sixty Group, to retail its brands in India. 4.3. Opportunities: Opportunities are external conditions that are helpful to the achievement of the objective. Opportunities are the platforms where a firm can perform and achieve its objectives and goals. The opportunities in front of Reliance retail are as follows: a) Growing retail market: Indian retail market is growing with a high speed Indian market is heading the charts for the GRDI (Global Retail Development Index)as per the AT Kearny. Indian Market is the most preferred market for retail investments. b) Increasing buying power of Indian consumers: the buying power of Indian consumers is increasing. As per the research of Global Retailing 2006, IGD it is around 414 US$ annually and it is increasing due to the increase in the number of working women’s. 12
  • 13. c) Many Untapped Markets in India: There are many untapped markets which are still waiting the entry of modern retailing. These areas include the Tier-2, Tier-3 cities and rural India. 4.4. Threats: Threats are external conditions that are harmful to the achievement of the objective. The threats involved in context to the Reliance retail are as follows: a) Increasing competition: increasing competition due to the entry of many national and global players (due to the entry of FDI). There are many players like Pantaloons Retail, Aditya Birla group; Bharti, Tata, Subhiksha, RPG and Shrilalmahal etc are some of the national players and some of the global players like Wal-Mart, Metro, SPAR, Carrefour, and Woolworth etc. b) Low Price Competition: It is facing Low-Price competition from players like Subhiksha, Big-Bazaar etc because these store have low operating cost as compared to reliance stores and are able to offer low price merchandise as compared to Reliance. c) Government restriction: Government restrictions on the concept of contract farming in some states relicts the concept of backward integration opted by Reliance retail. Apart from that entry of modern players in some of the states and rural areas of India {Uttarpradesh (state)and Kerala (Rural)} hampering the expansion plans of Reliance retail. d) Increase in the operating costs: increase in the operating costs due to increasing price of real estates, Sales tax and petrol directl increasing the y operating cost and hence a threat. 13
  • 14. 5.0. The TOWS matrix: In this matrix only the related aspects ofTOWS are taken. Strengths(S) Weaknesses(W) 1. Good Financial Position. 1. Multi-formats. 2. Backward Integration. 2. Prime location. 3. Experienced Mgmt. 4. Horizontal Integration. Opportunities(O) SO WO 1. Untapped 1. Good Financial position 1. Multi-Formats. Market (Expansion). 2. Increasing 2. Horizontal Integration 2. More sales. buying power Threats(T) ST WT 1. Increasing 1. Experienced Mgmt. and 1. Increasing operating costs backward integration. operating costs. 2. Low price 2. Backward Integration 2. Low Price competition and Good financial competition position. . 14
  • 15. 6.0. Conclusion: After analyzing all the aspects of TOWS analysis I conclude that the Reliance retail has more strength and is able to withstand with the competition and will able to achieve its goal and objectives. 15